Xebec Adsorption Inc. (TSXV: XBC – OTC: XEBEF)
("Xebec"), a global provider of gas generation, purification and
filtration solutions announced today its 2019 first quarter
results, with the following highlights:
- Record revenues of
$9.8 million in the first quarter of 2019 compared to $3.2 million
for the same period in 2018, a 206% increase.
- Positive EBITDA at
$1.1 million for 2019 compared to $(0.9) million for the same first
quarter in 2018.
- Net profit of $0.4
million or $0.01/share for 2019, compared to a net loss of ($1.4)
million or ($0.03)/share for the same period in 2018.
- Working capital
was stable at $5.2 million as of March 31, 2019, for a current
ratio of 1.4:1 compared with working capital of $5.2 million and a
1.6:1 ratio on December 31, 2018.
Financial Highlights:
|
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Three months ended March 31, |
% of Change |
|
|
|
|
|
|
|
|
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2019 |
|
2018 |
|
|
|
|
|
|
|
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|
|
|
(In millions of dollars) |
|
|
|
(unaudited) |
(unaudited) |
|
Revenues |
|
|
|
9.8 |
|
3.2 |
|
206 |
% |
Gross profit |
|
|
|
3.3 |
|
0.8 |
|
313 |
% |
Gross profit % |
|
|
|
34 |
% |
24 |
% |
|
EBITDA* |
|
|
|
1.1 |
|
(0.9 |
) |
|
Net income (loss) |
|
|
|
0.4 |
|
(1.4 |
) |
|
Net income (loss) per share - basic ($/share) |
|
|
|
0.01 |
|
(0.03 |
) |
|
Weighted average number of shares |
|
|
|
57,174,783 |
|
42,504,367 |
|
|
As at: |
|
|
|
March 31, 2019 |
Dec. 31, 2018 |
|
Total assets |
|
|
|
20.2 |
|
15.1 |
|
|
Total Liabilities |
|
|
|
19.9 |
|
15.7 |
|
|
Equity |
|
|
|
0.3 |
|
(0.6 |
) |
|
As at: |
|
|
|
May. 27, 2019 |
May 28, 2018 |
|
Backlog |
|
|
|
71.9 |
|
66.1 |
|
|
* EBITDA is a non-IFRS financial measure
and the Company defines it as earnings from operations excluding
finance charges, taxes, foreign exchange loss (gain) and
amortization. |
Financial Results
-
Revenues of $9.8 million for the
first quarter of 2019 compared to $3.2 million for the same period
in 2018, a 206% increase. The increase is mainly explained by the
high volume of major cleantech contracts and a company
acquisition.
- Gross profit of
$3.3 million or 34% of revenues for the first quarter of 2019
compared to $0.8 million for the same quarter in 2018, a 323%
increase compared to the same period in 2018. The company has a
higher gross margin in the cleantech segment.
- Net profit of $0.4
million or $0.01 per share for the three-month period ending March
31, 2019, compared to a net loss of ($1.4) million or ($0.03) per
share for the same period in 2018, an improvement of $1.8 million.
The increase is mainly due to higher sales and margin.
- Positive EBITDA of
$1.1 million for the three-month period ending March 31, 2019,
compared to ($0.9) million for the same period in 2018, an increase
of $2.0 million.
- Backlog increased
by $5.8 million, from $66.1 million on May 28, 2018, to $71.9
million on May 27, 2019.
- Selling and administrative
expenses increased by $1.0 million in the first quarter of
2019 compared to the same quarter of 2018. This is primarily
due to an organizational scale-up of employees and associated costs
to support the increased level of sales, order backlog and building
quote log.
- As of March 31, 2019, the company
had $0.5 million of cash on hand and positive working capital is
stable at $5.2 million, same as of December 31, 2018.
CEO Quote:“The renewable gas
industry is finally making headway. The recent announcement
of UPS to source 170 Million Gallon Equivalents of RNG
over a seven-year period from Clean Energy Fuels Corp., is the
largest ever purchase of RNG in U.S. history. This
will reduce as much as 1 million metric tons of
GHG emissions over the life of the agreement. It is
equivalent to planting 17,000,000 trees, removing 228,000 cars off
the road, or recycling 374,000 tons of waste that would otherwise
be sent to the landfill. UPS drives more than 6,100 CNG and
LNG vehicles which can be powered by RNG, allowing
these staggering reductions in lifecycle greenhouse gas
emissions when compared to conventional diesel.
Heavy duty transport and
public transit vehicles are ideal for RNG as a
transport fuel. Environmental benefits are significant, and the
technology is fully commercial and readily available, contrary
to either fuel cell or battery technology which
has not yet reached the same stage of development as
RNG for heavy duty applications. RNG is a unique fuel
derived from organic waste materials that links the circular
economy - from energy production in the form of zero-carbon
transport fuels benefiting the
environment, through other participants in the waste
generation and processing industries like farmers, food processors,
municipalities, waste companies, and others. Xebec looks
forward to playing a leading role in
the future development of this emerging
industry.” – Kurt Sorschak, President
and CEO, Xebec Adsorption Inc.
Current Market and Guidance for
2019Our outlook for renewable natural gas and hydrogen
purification remains unchanged from our previous guidance. We
expect our Service segment, which includes Industrial Air &
Gas, to continue its revenue growth in line with our acquisition
strategy. Overall, we anticipate significant revenue growth in 2019
from both our European and Chinese subsidiaries, as well as our
North American business. Our guidance is based on current order
backlog plus anticipated future orders throughout the year. We
maintain our guidance of CDN$ 45.0 million+ and earnings per share
(EPS) in the range of $0.10 to $0.13 for 2019. Execution and
organizational development will be key to continuing growth.
Management recognizes this and is fully focused on operational
performance and the creation of an environment that will allow the
company to scale. We are working on expanding our managerial
capabilities, building strong, results-driven teams that will
deliver on the opportunities facing us.
Systems - Clean TechnologyOur
renewable gas solutions are delivering expected results. Our
efforts to obtain larger landfill gas orders are gaining traction
and we expect to report progress on this front within the next two
quarters. These orders will be instrumental to our growth in
2020. We continue to regard quote activity as an early
indicator for future order activity. Our current quote log exceeds
$760 million, and our order backlog is almost $72 million. Xebec
has started to expand its European focus to include Spain, a
country that has not yet implemented any renewable gas policies,
but these are expected soon. We maintain our 2019 guidance for RNG
systems and equipment and expect growth of 130% to 150% in 2019,
generating revenues in the range of $33 to $35 million, expenses of
approx. $25 million and gross margins of approx. $10 million.
Service - Industrial Air &
Gas Products, Parts and SupportXebec
continues to pursue organic and inorganic growth opportunities and
expects to double revenues from $6.1 million in 2018 to about $12
million in 2019, with expenses of approx. $7.5 million and gross
margin at around $4.5 million. Our Q1/19 numbers are on track. We
will be introducing additional filtration products over the coming
months to help boost our overall gross margin. The product mix is
an important contributor to GM achievability which is 40%+ in this
segment. Our first acquisition, Compressed Air International (CAI)
in Ontario, has performed well in Q1/19 and is on track to grow
revenues by 20% this year. Xebec is working on its next two
acquisitions and expects to close them in 2019 with another two in
2020.
Infrastructure - Renewable Gas
GenerationIn early May 2019, Xebec’s Board of Directors
approved an expanded strategy for Xebec’s Infrastructure segment,
allowing management to engage with an increasing number of
potential partners to explore more opportunities. Currently, Canada
has two provinces that offer renewable Gas Purchase Agreements
(GPAs) with terms of up to 20 years and prices of up to $30/GJ.
California has recently announced a target of 20% RNG by 2030,
offering unique investment opportunities with prices of up to
$75/GJ. As previously announced, Xebec is actively working on the
establishment of its RNG infrastructure business where we will
build, own and operate (BOO) high-quality renewable gas assets in
Canada and California, and sell renewable natural gas to obligated
parties and other third-party off-takers. Xebec hopes to announce
its first project by mid-year. No revenues or costs have yet been
recorded.
2019 First Quarter Financial Statements
and Management’s Discussion and AnalysisThe complete
financial statements, notes to financial statements, and
Management’s Discussion and Analysis for the three-month period
ended March 31, 2019, are available on the company’s website at
www.xebecinc.com or on the SEDAR website at www.sedar.com
Related
links:https://www.xebecinc.comhttps://www.cnn.com/2019/05/22/business/ups-renewable-natural-gas/index.html
For more information:Xebec
Adsorption Inc.Sandi Murphy, Director, Investor Relations and
Marketing+1 450.979.8718 smurphy@xebecinc.com
Kurt Sorschak, President and Chief Executive
Officerksorschak@xebecinc.com
About Xebec Adsorption Inc.
Xebec Adsorption Inc. is a global provider of gas generation,
purification and filtration solutions for the industrial, energy
and renewables marketplace. Its customers range from small to
multi-national corporations and governments looking to reduce their
carbon footprints. Headquartered in Montreal (QC), Xebec designs,
engineers and manufactures innovative and transformative products,
and has more than 1,500 customers worldwide. With two manufacturing
facilities in Montreal and Shanghai, as well as a sales and
distribution network in North America, Europe, and Asia, Xebec
trades on the TSX Venture Exchange under the symbol XBC. For
additional information on the company, its products and services,
visit Xebec at xebecinc.com.
Cautionary Statement Neither
TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accept
responsibility for the adequacy or accuracy of this release. This
news release contains forward-looking statements and
forward-looking information (together, “forward-looking
statements”) within the meaning of applicable securities laws. All
statements, other than statements of historical facts, are
forward-looking statements and subject to risks and uncertainties.
Generally, forward-looking statements can be identified by the use
of terminology such as “plans”, “seeks”, “expects”, “estimates”,
“intends”, “anticipates”, “believes”, “could”, “might”, “likely” or
variations of such words, or statements that certain actions,
events or results “may”, “will”, “could”, “would”, “might”, “will
be taken”, “occur”, “be achieved” or other similar expressions.
Forward-looking statements, including statements concerning future
capital expenditures, revenues, expenses, earnings, economic
performance, indebtedness, financial condition, losses and future
prospects as well as the expectations of management of Xebec with
respect to information regarding the business and the expansion and
growth of Xebec operations, involve risks, uncertainties and other
factors that could cause actual results, performance, prospects and
opportunities to differ materially from those expressed or implied
by such forward-looking statements. Forward-looking statements are
subject to business and economic factors and uncertainties, and
other factors that could cause actual results to differ materially
from these forward-looking statements, including the relevant
assumptions and risks factors set out in Xebec's public documents,
including in the most recent annual management discussion and
analysis and annual information form, filed on SEDAR at
www.sedar.com. Furthermore, should one or more of the risks,
uncertainties or other factors materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those described in forward-looking statements or information.
These risks, uncertainties and other factors include, among others,
the uncertain and unpredictable condition of the global economy,
Xebec’s capacity to generate revenue growth, a limited number of
customers, and other factors. Although Xebec believes that the
assumptions and factors used in preparing the forward-looking
statements are reasonable, undue reliance should not be placed on
these statements, which only apply as of the date of this news
release, and no assurance can be given that such events will occur
in the disclosed times frames or at all. Except where required by
applicable law, Xebec disclaims any intention or obligation to
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
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